CAF to Propose Better Public Policies for a More Productive Latin America

CAF - Development Bank of Latin America- presented the book"The Latin America’s Development Challenge: Policies for a More Productive, Integrated and Inclusive Region", at a virtual event that brought together an assortment ofgovernment representatives, international experts and opinion leaders to discuss the problems and challenges facing Latin America in terms of economic recovery and fiscal consolidation, productivity, integration, inequality and social policies, digital transformation and labor markets, transparency and corruption eradication.

"Based on world production and trade figures over the past 50 years, Latin America would appear to be stagnant,” CAF executive president Luis Carranza Ugalde said. “However, over the past two decades we have had significant development in social and economic indicators.” Despite this, Carranza also said that the pandemic has “pushed back the region,” adding that the region is among the worst hit, showcasing the lowest expectations of growth. “How to understand this? How to design public policies that return us to a path of growth and prosperity?” Carranza asked. “That is the goal of these dialogues, to be able to share with you the ideas put forth by Latin America’s best economists on how to approach the different areas in need of attention in order to return to that path of growth.”

CAF knowledge vice president Pablo Sanguinetti, stressed that the presentation of the book includes a comprehensive agenda of interventions covering aspects from business productivity, infrastructure investment, the use of natural resources as a basis for development, the challenges and opportunities provided by technology, digitization and its implications on labor markets, equity problems and social policies.

Designing and implementing many of these policies requires not only the necessary resources, but also government capabilities to successfully carry out these initiatives. In Sanguinetti’s view, these government capabilities include, among other aspects, civil service regimes that generate incentives for public officials’ performance and training, as well as implementing governmental rules and procedures that balance control and autonomy, systems that allow citizen participation to hold bureaucracy and elected authorities accountable while having auditing mechanisms and administrative and judicial investigations that prevent and penalize corruption.

The first edition of the Development Dialogues was attended by the Costa Rican vice president Epsy Campbell, who said that there is a challenge facing the traditional provision of public services and hat the region’s countries must “re-organize protocols of all kinds to live with the pandemic,” stressing that this is the benchmark to test the nations’ flexibility in the midst of an emergency. The vice president also added that technology and digitization have been a key part of governments’ efforts to address economic and social challenges, saying that the pandemic has allowed the region’s administrators to “transform the state in a much faster period of time to guarantee basic services to the population."

During his participation Augusto de la Torre, director of the Center for Economic and Business Research (CIEE) of Ecuador’s University of the Americas and co-author of the book, said that some of the problems facing the region today have to do with the region’s period of closure during the years of import substitution, which marked the productive orientation that prevented the region from properly globalizing. "Latin America's challenges are marked by flawed globalization,” de la Torre said. “There are major weaknesses that persist and create a significant gap in the regional economy’s productivity against the frontier of global productivity.”

In many countries, in INCAE business school dean Alberto Trejos’ opinion, corruption has led to the creation of “controls that did not exist before,” which, in some cases, are really necessary to be able to combat it, but in many others do not yield esults because of the way they are designed, complicating citizens' lives and hindering public policies.

Mexico’s National Institute of Public Administration board of directors vice president Gloria Luz Alejandre said that one of the problems facing Mexico has to do with technology, the education sector being largely affected. Unfortunately, the population does not have the adequate Wi-Fi and mobile data infrastructure needed to reach the most vulnerable or unprotected sectors.

In this regard, the Mexican government has launched educational programs - in the form of TV broadcasts - and carried out a few programs to distribute computers to regions with Internet penetration, although unfortunately there are other regions that are far from this possibility.

“Latin America’s Development Challenge” addresses the need to drive growth through key issues such as infrastructure, natural resources, integration, government capabilities, digital revolution, public policies and productivity. The book, which has among its writers as many as nine renowned experts, including Luis Carranza, Augusto de la Torre, Nora Lustig, Patricio Meller and Eduardo Levy, explores policy initiatives in each of these areas that can be very relevant in the context of the region’s post-COVID-19 recovery.